Credit Card Refer A Friend 1099

It appears the credit card refer a friend 1099 is back in a big way this year. I feel like they were a bit hit or miss during peak covid, but we are getting multiple reports of them being back. The two biggest culprits appear to be Chase and American Express. While most points earning are not taxable, because they are considered a rebate on spend, some banks have been categorizing referral bonuses a bit differently. Lucky for us, welcome offer points seem to fall under the same rebate on spending umbrella that regular points earning is.

That is my guess at least, as I am not an accountant and this is not financial advice. You should consult your accountant professional if you received a credit card refer a friend 1099. Covering my butt officially done!

Bank 1099-MISC

The form that comes is a 1099-MISC and the amount is filed under other income. The banks tend to value their points at 1 cent a piece for referrals. That means if you get 50,000 points from referrals you could get a 1099-MISC for $500 etc. It is believed that you need to cross a $600 threshold for the bank to file the paperwork. I am unsure if that is across all card accounts or each individual account. I have received them for under $600 in the past so I think they consider all referrals across all cards for each institution.

The credit card refer a friend 1099 will be sent out for each individual card as well. Which means that you could get more than of them from each individual bank. It all comes down to how many referrals you had and which cards you used.

These refer a friend 1099 documents should be presented to your accountant. It is likely that you will need to pay taxes on the money reported. Your tax professional can give you the final decision on that when you meet with them.

Credit Card Refer A Friend 1099: ToP Thoughts

While a credit card refer a friend 1099 can be a bit of a bummer, it isn't anything new. These have been going out to people for a few years now. It does make it so the points you earn from the referrals are no longer “free points,” but you still get way more value from them compared to the taxes owed. For that reason I don't get too upset over it. The logic behind them also makes sense to me because they are not produced via spend like normal point earning and welcome offers are. Hopefully we keep that rebate on spend rule in place for a long time!

Let me know if you received any 1099's from referral bonuses and which bank they came from over in the ToP Facebook Group.